Weak export demand pull down guar gum prices by 35%

Good sowing in current kharif season and expectation of higher carryover stock has also put increased pressure on the prices

Guar gum prices have fallen by 35 per cent in last four months owing to weak export demand, especially from regions like the US. According to industry sources, constant drop in crude oil prices have seen a decline in guar gum demand globally by almost 50 per cent from importing countries such as the US.

Add to that, good sowing in current kharif season and expectation of higher carryover stock has also put increased pressure on guar gum prices, which as against Rs 130 per kg four months ago, have now fallen to the levels of Rs 75-78 per kg. "Guar gum exports have fallen by 50 per cent due to passive demand in the oil drilling industry of the US. Moreover, export demand from Europe, Latin America, China and Southeast Asia have also decreased for India," said Rajesh Kedia, director, Jai Bharat and Chemicals Limited based at Haryana.

Guar gum is derived from guar seeds (cluster beans), alegume crop that grows in semi arid regions of Rajasthan, Gujarat and Haryana. In 2014-15, total production of guar seed stood at 1.75 million tonnes, which led to extraction of nearly 450,000 tonnes of guar gum during the said period.

Guar gum exports, however, stood at about 375,000 tonnes. "Due to dip in demand since January, we are expecting around 800,000 tonnes carry forward stock in guar seed by end of October this year. On the other hand ongoing kharif sowing has increased which, is also likely to impact the price of guar gum," said Girdharilal Sharda, president of All India Guargum Manufacturers Association.

As per Rajasthan agriculture department data, as on August 3, 2015, sowing of guar seed has been in the range of 3.46 million hectares asagainst 2.23 million hectares in corresponding period last year. Area under guar seed has been registered at around 145,000 hectares by second week of August this year in Gujarat, the state agriculture department stated. According to industry sources till September this year, demand is unlikely to rise thereby worsening guar gum price situation.

Manufacturers also estimate about 475,000 tonnes guar gum production for nextseason. Meanwhile, according to Kedia, during April to July 2015,average monthly exports has been reported at about 22,000-25,000 tonnes while the same was about 50,000 tonnes for the said period in 2014.